PUBLIC DISCLOSURE COMMUNITY REINVESTMENT ACT PERFORMANCE EVALUATION

Transcription

1 PUBLC DSCLOSURE COMMUNTY RENVESTMENT ACT PERFORMANCE EVALUATON Metropolitan Commercial Bank RSSD No Park Avenue New York, :NY FEDERAL RESERVE BANK OF NEW YORK 33 LBERTY STREET NEW YORK, NY NOTE: This document is an evaluation of this institution's record of meeting the credit needs of its entire community, including low- and moderate-income neighborhoods, consistent with safe and sound operation of the institution. This evaluation is not, nor should it be construed as, an assessment of the financial condition of this institution. The rating assigned to this institution does not represent an analysis, conclusion, or opinion of the federal financial supervisory agency concerning the safety and soundness of this financial institution.

2 August 14, 2014 TABLE OF CONTENTS nstitution's CRA Rating... 2 Description of nstitution... 3 Description of Assessment Area... 3 Scope of Examination... 4 Performance Context... 7 Conclusions with Respect to Performance Tests Lending Test Community Development Test Fair Lending or Other llegal Credit Practices Review Appendices CRA Appendix A: Glossary..., CRA Appendix B: 2014 & 2015 Aggregate Comparison Loan Distribution Tables CRA Appendix C: Assessment Area Map... 24

3 NSTTUTON'S CRA RATNG: Metropolitan Commercial Bank (MCB) is rated "Needs to mprove." An institution in this category needs to improve its overall record of helping to meet the credit needs of its assessment area, including low- and moderate-income neighborhoods, in a manner consistent with its resources and capabilities. The following table indicates the performance level of Metropolitan Commercial Bank with respect to the Lending and Community Development Tests. PERFORMANCE LEVELS METROPOLTAN COMMERCAL BANK PERFORMANCE TESTS : Lending Test Community Development Test Outstanding Satisfactory : X Needs to mprove X Substantial Noncompliance MCB's Community Reinvestment Act (CRA) performance of Needs to mprove under the Lending Test supports the overall rating. Examiners did not identify any evidence of discriminatory or other illegal credit practices. The following points summarize the bank's Lending Test and Community Development Test performance: The Lending Test is rated Needs to mprove: A majority of evaluated loans were made outside the bank's assessment area. MCB's loan-to-deposit ratio was reasonable given the bank's size, financial condition and assessment area credit needs. The geographic distribution of small business loans reflects poor dispersion throughout the assessment area. The distribution of small business loans to businesses of different sizes reflects reasonable penetration. No CRA-related complaints were received since the previous evaluation. The Community Development Test is rated Satisfactory: MCB's community development performance demonstrates adequate responsiveness to community development needs of the assessment area through community development loans, qualified investments and community development services, as appropriate, considering MCB's capacity and the need and availability of such opportunities for community development in the assessment area. 2

4 DESCRPTON OF NSTTUTON Metropolitan Commercial Bank (MCB) is a full-service commercial bank headquartered in New York City, NY. MCB is organized under a one-bank holding company, Metropolitan Bank Holding Corp. MCB has a total of five branches. n addition to its headquarters, MCB operates two other full-service retail branches in the midtown Manhattan (New York County, NY) area, one full-service branch in Brooklyn (King's County, NY), and one branch in Great Neck in Nassau County, NY. MCB's primary business focus is to provide commercial banking products and services to businesses. Commercial loan products include working capital, equipment financing, account receivables financing, and letters of credit, among others. The bank also offers a range of deposit products ranging from commercial and personal checking accounts, money market and savings accounts, and certificates of deposit. Services offered include online banking, online bill pay and remote deposit capture. As of June 30, 2016, MCB had total assets of $1.1 billion, net loans and leases of $938 million and total domestic deposits of $1.0 billion. Commercial mortgage and commercial and industrial lending represent 88% ($825 million) of the bank's loan portfolio. Loans secured by one- to four-family residential properties comprised 11 % ($103 million) of the bank's loan portfolio. MCB operates in a competitive banking market. Competitors include large federal banks, local community and state-chartered banks, credit unions, mortgage companies and non-bank financial institutions. The deposit market is dominated by large financial institutions such as JPMorgan Chase Bank, Bank of New York Mellon, HSBC Bank USA and Citibank. These top four banks control 68.2% of the deposit market share. Based on deposits reported to the Federal Deposit nsurance Corporation (FDC) on June 30, 2016, MCB ranked 45th of 116 banks with 0.08% of deposit market share in the five boroughs comprising New York City plus Nassau County, the assessment area the bank designated for conducting most of its business. MCB's previous CRA examination was conducted by the Federal Reserve Bank of New York dated June 23, 2014, and the bank received an overall rating of "Satisfactory" under the Federal Financial nstitution Examination Council (FFEC) ntermediate Small Bank Examination Procedures. MCB has no financial or legal impediments that would prevent it from fulfilling its responsibilities under CRA. DESCRPTON OF ASSESSMENT AREA MCB's assessment area meets regulatory guidelines and does not arbitrarily exclude low- or moderate-income areas. Due to a new branch opening in Great Neck, NY on December 9, 2015, MCB changed its assessment area delineation since the last examination by adding Nassau County in JvD (Nassau-Suffolk). The assessment area is a part of MSA (New York-Newark-Jersey City, NY-NJ-PA). The assessment area is comprised of part of MD

5 (New York-Jersey City-White Plains), comprised of the five counties of New York City: Bronx, Kings (Brooklyn), New York (Manhattan), Queens, and Richmond (Staten sland) counties; and part of MD consisting of Nassau County, NY. Based on the 2010 Census, these counties include 2,452 census tracts; 14% are low-income, 27% are moderate-income, 33% are middleincome and 23% are upper-income. ncome levels for 3% of census tracts in these counties are unknown. Examiners found that the assessment area is in compliance with the requirements of 12 CFR and does not arbitrarily exclude low- and moderate-income (LM) geographies. A map of the assessment area is in Appendix C. SCOPE OF EXAMNATON Procedures MCB's CRA performance was evaluated using the FFEC's CRA nteragency Examination Procedures for ntermediate Small nstitutions, which consist of a Lending Test and a Community Development Test. Effective January 1, 2017, intermediate small institutions are banks with assets of at least $307 million as of December 31 of both of the prior two calendar years and less than $1.226 billion as of December 31 of either of the prior two calendar years. The asset threshold level adjusts annually based on changes in the Consumer Price ndex. As of December 31, 2015, and December 31, 2016, the bank's assets totaled $976 million and $1.220 billion, respectively. The examination procedures include two tests as follows: the Lending Test and the Community Development Test. A bank must achieve at least a satisfactory rating under each test to obtain an overall satisfactory rating. The Lending Test review period is from January 1, 2014, through December 31, The Lending Test considers an institution's performance according to the following criteria: Loan-to-deposit ratio Assessment area concentration Geographic distribution Borrower profile Response to CRA-related complaints For the Community Development Test, the evaluation covers the period from June 1, 2014, to June 30, The Community Development Test considers an institution's performance according to the following criteria: The number and dollar amount of community development loans, qualified investments, and community development services. 4

6 The responsiveness of such activities to the community development needs of a bank's assessment area. Products Examiners reviewed small business, multi-family, home purchase, and refinance loans during this examination. Consistent with MCB's focus on commercial lending, the performance evaluation was based primarily on small business loans. Home purchase, refinance, and multifamily lending were considered in the evaluation, but had minor impact on the overall assessment due to the limited volume during the review period. n addition, community development loans, investments, and services were reviewed. The real estate-related mortgage loans considered in the evaluation were reported under the HMDA. n addition, a sample of 156 small business loans was selected for review. Examiners verified the integrity of the bank's HMDA-related and small business loan data provided by the bank for the reporting years 2014 through The universe of HMDA-related loans (home purchase and refinance loans) and small business loans was verified and analyzed. Loan samples were selected using the Federal Reserve Board of Governors' sampling procedures. Lending Analysis The borrower and geographic loan distribution analyses were based on loan activity in MCB's assessment area. MCB's performance was compared to 2010 Census demographic data. To evaluate the geographic distribution of small business loans, the analysis compared the proportion of MCB's loan originations to the proportion of businesses located in LM geographies. To evaluate the borrower characteristics of small business lending, MCB's proportion of loans to businesses with gross annual revenues (GAR) of $1 million or less, based on Dun and Bradstreet (D&B) data, was compared to the proportion of all such businesses located in the assessment area. The size of the small business loans was also used as a proxy to identify lending to businesses with GAR of $1 million or less. Borrower and geographic distribution analyses were based on MCB's performance in 2014, 2015 and 2016 compared respectively to the 2014, 2015 and 2016 aggregate performance of all lenders subject to CRA small business reporting. Lending performance in 2016 was compared to 2014 and 2015 performance and any significant deviation was noted. Multi-family and nonowner-occupied 1-4 family residential lending were similarly analyzed for geographic distribution analysis but not for borrower distribution since income is not reported for these products. 5

7 Deriving Overall Conclusions Before reaching a conclusion about the overall performance regarding geographic distribution and borrower characteristics in the assessment area, examiners weighted loan products by the total lending volume in order to determine the influence of performance on the overall conclusion. Peer data was also used for the analysis of community development loans and qualified investments. Local peer banks were selected based on their amounts of assets, deposits and branches and their presence within MCB's assessment area. Examiners also conducted interviews with representatives of two community development organizations in order to gain an understanding of local credit needs. Community groups emphasized the assessment area's need for affordable housing, economic development and support for community services for LM individuals. Examination Period MCB's HMDA-related and small business lending originated between January 1, 2014 and December 31, 2016 were used in the analysis. The bank's HMDA-related and small business loan data were verified by examiners. MCB's community development activities (loans, investments, philanthropic grants, and services) provided between June 1, 2014 and June 30, 2017, were evaluated in accordance with FFEC examination procedures. The financial data considered in this examination is as of June 30,

8 PERFORMANCE CONTEXT The following demographic and economic information was used to describe the assessment area and to evaluate the context in which MCB operates. The information was obtained from publicly available sources, including the U.S. Department of Commerce's Bureau of the Census, the U.S. Department of Labor, the Federal Financial nstitutions Examination Council (FFEC), the New York City Department of Housing Preservation and Development (HPD), the National Association of Realtors, and the Federal Reserve Bank Beige Book. Demographic Characteristics According to the 2010 Census, the total population of MCB's MSA (New York-Newark Jersey City, NY-NJ-PA) assessment area was 9,514,665. The assessment area consists of 2,452 census tracts, of which 14% are low-income and 27% are moderate-income. Low- and moderateincome (LM) census tracts were concentrated in western Queens, northern Brooklyn, upper Manhattan, southern Nassau and Bronx County. Located within MCB's assessment area, New York City is the most populous city in the United States with an estimated population of 8,537,673 as of The New York City population alone accounts for over 42% of the total population of the State of New York. Exhibit 1 provides additional assessment area demographics. New York City is a very diverse area, resulting from the city historically serving as a primary point of entry into the U.S. for immigrants. The 2010 Census reports the number of foreign-born people residing in New York City at slightly less than 3 million or 37% of the area's total population. ncome Characteristics According to the 2010 Census, the MSA assessment area has 2.2 million families, of which 30% are low-income families, 17% are moderate-income families, 18% are middleincome families, and 36% are upper-income families. The 2010 census also indicates that 19% of all persons residing in New York City live below the poverty level, compared to the national average of 15% of all Americans living below the poverty level. n Bronx County, 30% of residents are living below the poverty level as of Therefore, community development activities that target LM individuals and families are particularly important in New York City. 7

9 Exhibit 1 Assessment Area Demographics Families < Poverty ncome Tract Families by Categories Distribution Level as % of t Tract ncome Families by Tract i # % # % # %! Low-income , , [ Moderate , , income Middle-income , ,232 : 7.3 J Upper-income , , i Unknown ! income! j Total 2, ,182, , Assessment Area! i Housing Housing Types by Tract Units by Owner-Occupied l Rental Tract #1 % %[ # % Low-income 566,485 47, , Moderate- 1,044, , , : income Middle-income 1,119, , , Upper-income 1,079, , , Unknownincome i 71.1 i Total 3,810,145 1,370, ,120,059 ss.6 Assessment Area i Families by Family ncome # % 646,822! , , , ,182, Vacant # % 42, , , , , Total Businesses Businesses by Tract & Revenue Size by Less Than or = : Over $1 ' Revenue Not Tract! $1 Million Million Reported # % # % # % # % Low-income 35, , , Moderate- 77, , , income Middle-income 115, , , Upper-income f 165, , , , Unknown- 10, , , income Total 404, , , , Assessment Area i Percentage of Total Businesses: Based on 2016 D&B information according to 2010 ACS Boundaries. 8

10 According to FFEC data, for MD (New York-Jersey City-White Plains, NY-NJ), the FFEC-estimated median family income (MF) was $68,900 in 2014, $71,300 in 2015, $72,600 in 2016 and $73,700 in According to FFEC data, for MD (Nassau County-Suffolk County, NY), the FFEC-estimated median family income (MF) was $105,100 in 2014, $109,000 in 2015, $106,200 in 2016 and $110,800 in Median income estimates for New York City and Nassau County from 2014 to 2017 are generally above the income levels for New York State. During the same time period, New York State's median family income ranged from a low of $69,500 to a high of $73,400. New York City also has a large proportion of non-family households, which tend to have lower incomes. Housing Characteristics MCB's assessment area has approximately 3.8 million housing units, of which 36% are owneroccupied, 56% are rental units, and 8% are vacant. n New York City, approximately 45% of rental stock in New York City is rent stabilized and less than 2% is subject to rent control, which makes finding available housing, including affordable housing, more challenging. Within the assessment area, housing is expensive relative to income levels, causing significant affordability issues for the LM population. According to the National Association of Realtors, the median sales price of a single-family home in MSA (New York-Newark-Jersey City, NY-NJ-PA) increased modestly from $385 thousand in 2014 to $389 thousand in Moreover, in the second quarter of 2017 the median sales price of a single-family home in MSA rose to about $414 thousand. Housing affordability continues to be an issue in the New York City area due to high housing costs. Housing is generally considered affordable if rent or associated ownership costs consume no more than 30% of household income. According to Census data, 49% of renters indicated that their rent costs as a percentage of household income is 30% or more. With the high housing costs, homeownership remains unaffordable to LM families, and even for many middle-income families in the assessment area. n 2016, the median housing cost in MD was about 10 times the FFEC-estimated median family income (MF) for low-income borrowers and about 6 times the FFEC-estimated MF for moderate-income borrowers. The combination of lower household incomes and high real estate prices continues to make it challenging for LM wage earners to find affordable housing in the assessment area. The assessment area also has a shortage of affordable rental housing, which is in high demand due to the high purchase prices for homes. According to the Census data, only 3% of total rental housing units in New York City are vacant and available for rent, well below the 5% threshold defined to be a housing emergency and used to justify the continuation of rent control and rent stabilization. With the increasing gap between renter incomes and the cost of rental housing, 9

11 coupled with the low availability of rental housing units, additional affordable housing is necessary in the assessment area in order to meet the housing needs of LM individuals. nformation from community contacts supports the need for community services and affordable housing, especially programs that benefit the lowest income New Yorkers. Labor, Employment and Economic Characterisncs The New York City area is a global hub of international business and commerce. The city is a major center for finance, insurance, real estate and the arts in the United States. Many major corporations are headquartered in the New York City area, including numerous Fortune 500 companies. As of 2016, the MSA assessment area had nearly 405 thousand businesses, of which 89% were small businesses with gross annual revenues of $1 million or less. The labor market in New York City has shown improvement during the review period. The annual unemployment rate in New York City was 5.2% in 2016, which decreased from 7.3% as reported in n Nassau County, the unemployment rate improved to 3.9% in 2016 from 4.8% in According to the Federal Reserve Bank Beige Book (November 2016), businesses in New York City reported that hiring was fairly strong, although it may have slowed somewhat. Modest growth in wages and salaries was also reported. CONCLUSONS WTH RESPECT TO PERFORMANCE TESTS LENDNG TEST MCB demonstrated needs to improve performance under the Lending Test in its MSA assessment area. This conclusion is supported by the fact that less than a majority of the combined total of home mortgage and small business loans were originated within the assessment area. The poor geographic distribution of HMDA-related and small business loans also supported this conclusion. The institution's home mortgage and small business loans were evaluated pursuant to the following criteria: (1) loan-to-deposit ratio; (2) assessment area concentration; (3) borrower profile; (4) geographic distribution; and (5) response to CRA-related complaints. These five performance categories are detailed below. Loan-to-Deposit Ratio MCB's loan-to-deposit ratio was reasonable given the bank's size, financial condition, business model and the credit needs of its assessment area. MCB's average loan-to-deposit ratio for the thirteen quarters between March 31, 2014 and March 31, 2017 was 102%, based on information contained in MCB's Consolidated Report of Condition and ncome (Call Report). MCB is primarily a commercial lender and as a result its loan portfolio is predominately comprised of 10

12 commercial loans. This ratio was above both the national peer average of 80% for similarly-sized banks and an average of 82% for five similarly-situated banks, in terms of commercial lending as a percentage of total lending located in MCB's assessment area during the evaluation period. However, the majority ofmcb's loans were made outside of its assessment area, which has been taken into account in evaluating its loan-to-deposit ratio and reaching the conclusion that it is reasonable. MCB's loan-to-deposit ratio is considered stable. Lending in Assessment Areas MCB originated a majority of its loans outside its assessment area as shown in Exhibit L Overall, only 23% of the loans evaluated for this CRA examination were originated in the assessment area, down from 82% at the last examination. This percentage is driven by the low level of small business loans (12%) originated in the assessment area (down from 88% at the last examination). During this current review period, MCB purchased small business loans from a nationwide lender of primarily medical-related loans. HMDA-related lending was better with 78% within the assessment area (similar to 77% at the last examination). n terms ofloan dollars, 67% of the total dollars were within MCB's assessment area, due in large part to HMDA-related lending that was predominately commercial rather than residential. However, greater weight is placed on the number of loans rather than the dollar amount, as representing better responsiveness to assessment area credit needs. Overall, these lending levels do not support that lending activities are focused within the bank's assessment area and make it difficult to perform a meaningful analysis of the geographic and borrower distribution of lending. t is noteworthy that MCB funding sources are predominately local deposits, which make up 77% of bank liabilities. A primary purpose of CRA is to evaluate whether banks are making loans where they are taking deposits, which appears not to be the case for this institution. Considering MCB's strategic focus as a commercial lender, and the large number of businesses (nearly 405 thousand) within the assessment area, including 89% with gross annual revenues of $1 million or less, the level oflending within the assessment area is deemed to be poor. Exhibit Lending 1-side and Outside the Assessment Area January l, December 31, 2016 Loan Types nside Outside # % $(000s) % # O/o $(000s) HomePurchase , ,281 Multi-Family , ,800 Refinancing ,750 Total BMDA related , ,831 Sm.all Business , ,782 Total Small Business related , ,782 TOTAL LOANS , ,613 %

13 Lending to Borrowers of Different ncomes and to Businesses of Different Sizes The overall distribution of small business loans reflected reasonable penetration among businesses of different sizes. MCB specializes in commercial banking and the HMDA-related loans in the review period were for multi-family and non-owner-occupied 1-to-4 family dwellings, for which borrower income is not reported. Of the 25 HMDA loans in the assessment area this review period, borrower income was reported on only 4 of those loans. This is not a large enough volume for any significant analysis. As a result, HMDA-related loans were excluded from this analysis. Lending to Businesses of Different Sizes MCB's overall distribution of loans to businesses of different sizes was reasonable. n 2016, MCB's proportion of loans to businesses with GAR of $1 million or less was 89%, compared to 89% of such businesses operating in the assessment area. MCB's 2016 performance exceeded that of the aggregate, which reported 42% of its loans to small businesses. MCB's performance in 2016 was more favorable than its performance in 2015 and 2014, although volumes were very low. MCB's proportion of 2016 small business loans that were in the amount of $100 thousand or less was 33%. This was below the aggregate, which originated 96% of its loans in the amount of $100 thousand or less. The comparison of loans in the amount of $100 thousand or less is skewed, however, as the aggregate includes large national credit card lenders which typically offer credit in smaller dollar amounts. MCB's proportion of small business loans that were in the amount of $100 thousand or less in 2016 was more favorable in comparison to the proportions in 2015 and 2014, although volumes were very low. There were only 5 loans in the amount of $100 thousand or less of only 19 total small business loans during the review period. Geographic Distribution of Loans MCB's overall geographic distribution of HMDA-reported multi-family and non-owneroccupied 1-4 family dwelling loans and small business loans reflected poor dispersion throughout all of the bank's assessment area, including LM census tracts. Consideration was given to the bank's business strategy as a commercial lender and the competitive banking environment of the assessment area. Multi-Family Dwelling Loans The geographic distribution of multi-family dwelling loans reflected poor dispersion when compared to aggregate lending and the share of rental units in LM geographies. n 2016, MCB originated a total of two multi-family dwelling loans within the assessment area and none were located in LM geographies. The aggregate made 17% of the multi-family dwelling loans in low- 12

14 income geographies and 37% in moderate-income geographies. Of the total renter-occupied units in the assessment area, 22% and 34% respectively are located in low-income and moderateincome geographies. n 2015, MCB originated a total of 2 multi-family dwelling loans with one or 50% in low-income geographies and none in moderate-income geographies. While in absolute terms, the share of MCB's loans in low-income tracts is above the aggregate level of 16%, the overall low volume oflending by MCB must be considered. n 2014, MCB originated a total of 9 multi-family dwelling loans, with none in low-income geographies and 4 or 44% in moderateincome geographies. Again, while MCB's share of multi-family dwelling loans in moderateincome census tracts is above the aggregate level of 35%, the overall low volume of lending must be taken into account when evaluating the bank's performance in comparison with the aggregate. For the entire review period, MCB made 38% of its multi-family dwelling loans in LM tracts, which is below the aggregate level of 41 % and not reflective of the 57% of renter-occupied units in the assessment-area located in LM geographies. Non-Owner-Occupied 1-4 Family Dwelling Loans The geographic distribution of non-owner-occupied 1-4 family dwelling loans reflected poor dispersion when compared to aggregate lending. n 2016, MCB originated two non-owneroccupied 1-4 family dwelling loans, with none in low-income geographies and one or 50% in moderate-income geographies. Although in absolute terms, the share of MCB's loans in moderate-income geographies is above the aggregate level of 26%, the overall low volume of lending by MCB in its assessment area indicates that MCB is not meeting the credit needs of the assessment area. n 2015 and 2014, MCB made no non-owner-occupied 1-4 family dwelling loans in low- and moderate-income geographies where the aggregate made 33% and 32% of its loans respectively. Small Business Loans The overall distribution of small business loans in LM geographies was poor when compared with the level of businesses as well as with the performance of the aggregate of small business reporting lenders. Out of just nine small business loans made in 2016, none were made in lowincome census tracts. n comparison, the aggregate originated 9% of its small business loans in low-income census tracts, and 9% of small businesses operating within the assessment area are located in low-income census tracts. MCB originated two of the nine small business loans, or 22%, in moderate-income geographies. n comparison, the aggregate originated 20% of its small business loans in moderate-income geographies, while 19% of businesses operating within the assessment area are located in moderate-income geographies. n 2015, MCB originated no small business loans in low-income geographies. n comparison, the aggregate originated 10% of its small business loans in low-income geographies, while 9% of 13

15 small businesses operating within the assessment area are located in low-income geographies. MCB originated one or 50% of its small business loans in moderate-income geographies. Although in absolute terms, the share of MCB's loans in moderate-income tracts is above the aggregate lending level of 20% and 19% share of businesses in these geographies, the overall low volume oflending by MCB must be considered. n 2014, MCB originated one or 13% of its small business loans in low-income geographies. n comparison, the aggregate originated 9% of its small business loans in low-income geographies, while 9% of small businesses operating within the assessment area are located in low-income geographies. MCB originated three or 38% of its small business loans in moderate-income geographies, in comparison to the aggregate lending level of 19% and 19% share of businesses in these geographies. n absolute terms, the share of MCB's loans in low- and moderate-income geographies is above the respective aggregate lending levels and shares of businesses in these geographies; however, the overall low volume of lending by MCB in its assessment area diminishes the bank's performance. Response to Complaints No complaints were received by MCB relating to the bank's CRA performance, and no CRArelated complaints have been filed with the Federal Reserve Bank of New York during the examination period. 14

16 NewYork,SY 2016 Aggregate Comparison Loan Distribution Table Assessment Area/Group: MSA Low Moderate Middle Upper Unknown, Total Low Moderate Middle Upper Unknown Total Low Moderate i Middle Upper Unknown Total Low ' Moderate Middle Upper Unknown Total Low Moderate, Middle Upper Unknown 1 Total ncome Categories Low Moderate Middle Upper : Unknown Tract Unknown Total $1 Million or Less i $100,000 or less i $100,001-$250,000 ' $250,001-$1 Million Total Originations and Purchases By Tract ncome HMDA By Borrower ncome Bank Aggregate Bank Aggregate % % SWOOs) % % $(0001) # % i % $(000s) % % S(OOOs) Home Purchase 33.3% 33.3% 33.3% o 0 i # % 37.2% 42.9% % 79.9% % 25.7% 67.9% % 16.5% 40.7% 38.6% % J 15.7% 41.0%, 39.2% i; 10 : 4.9% 18.6% 38.9% 37.6% %! 36.6%! 19.4% 26.9% % 16.8% 40.2% ; 38.5% 10 Bank % 22.2% 33.3% 44.4% % 33.3% 33.3% 33.3% 10! i 3.8% % % % 0 0.1% Refinance 4.0% % % % 0 0.2% ,. j' Home m 1>rovement 4.3% o 16.6% 0 ' 26.3% % 0 i' Multi-Family 15.3% % % % HMDAToWs 6.2% 0! 17.9% 0 j 21.1% o 48.2% 0 i 0.1 % S 10 i SMALL BUSNESS By Tract ncome 37.4% 9.6% 53.0% 10 By Revenue 74.0% By Loan Size 7.8% 23.9% 68.3% 10 % 9.2% 19.7% 28.6% 39.6% 2.4% 0.5% % 95.6% 2.3% 2.1% i 2.0% 1 9.9% 21.8% 54.8% 11.6% % 8.1% 19.1% 54.0% 16.5% % 11.0% 19.4% 59.9% 5.8% % 9.0% 20.2% 53.3% 15.4% 10 % $(000s) 8.6% 16.9% 25.9% 44.0% 4.2% 0.4% % 45.2% 13.7% 41.0% % 4.6% 13.4% 65.5% 1'5.5% % 4.1% 12.6% 64.5% 17.6% % 4.2% 11.0% 72.3% 11.0% % 3.6% 10.5% 52.4% 32.8% 10 15

17 COMMUNTY DEVELOPMENT TEST MCB's performance under the community development test is rated satisfactory. MCB demonstrated overall adequate responsiveness to the community development needs of the assessment area through the provision of community development loans, qualified investments, and community development services. This assessment also considered MCB's capacity and the need and availability of community development opportunities in MCB's assessment area. The majority of MCB's community development lending and qualified investment activity targets community services and affordable housing. During the examination period, MCB made a total of $178 million in community development loans and qualified investments benefiting the assessment area, which totaled approximately $57 million on an annualized basis. MCB's total community development efforts in terms of dollar volume increased approximately 350% on an annualized basis compared to the prior examination. Over half of MCB's community development efforts consisted of new obligations approved since the prior CRA examination. Community development lending and investments were primarily directed at community services and affordable housing initiatives. Community Development Activity Community Development Loans and Qualified nvestments Combined Affordable Community Economic Revitalize and Totals Assessment Area Housmg Services Development Stabilize # $000s # $000s # $000s i # $000s # $000s MSA , , , ,081 Total , , , ,081 Percentage 21% 59% i 78% 40% 0% 0% 2% 1% 100% 100% Community Development Loans Affordable Community Economic 1 Revitalize and Assessment Area Housing Services Development Stabilize Totals # $000s # $0005 # $000s # $000s # $000s MSA , ,669 0 ' 0 2 1, ,961 Total 15 99, ,669! , ,961 Percentage 25% 58% 72% 41% 0% 0% 3% 1% 100% 100% 16

18 New York, NY Qualified nvestments Affordable Assessment Area Housing Community Economic Services Development Revitalize and Stabilize Totals # $0005 # $000s # $000s # $doos # $000s MSA , i 0 0 ' i 49 5,120 Total 8 5, ,120 Percentage 16% 98% 84% 2% 0% 0% 0% 0% 100% 100% When compared to five similarly-situated banks operating in the assessment area, the level of MCB' s total annualized community development loans and investments as a percentage of average assets, as a percentage of tier one capital, and as a percentage of deposits was above average among its peers. MCB ranked first out of five banks, as a percentage of average assets, as a percentage of tier one capital, and as a percentage of deposits. Examples of community development loans and qualified investments include a: $2.5 million term loan to provide capital for a nursing home serving predominantly lowand moderate-income senior-aged patients. The facility is in a low-income census tract. $7 million term loan for a multi-family housing property located in a moderate-income census tract. The property is targeted to low- and moderate-income residents. $239 thousand term loan to a nursing home to purchase nursing home equipment. The nursing home serves predominantly low- and moderate-income senior-aged patients and is located in a moderate-income census tract. $1.5 million investment in a multi-family mortgage-backed security where funds were used for an affordable rental property complex in Brooklyn. The apartment complex is located in a moderate-income census tract and provides affordable housing to low- and moderate-income individuals. The investments are made within MCB's assessment area. Various charitable grants to community development organizations totaling $147 thousand. Also during the review period, MCB participated in various (17) financial and small business education events with local chambers of commerce and community groups, covering topics such as banking relationships and future planning. While the level of MCB's community development loans was excellent, MCB's overall community development test performance was adequate due to the moderate level of qualified investments and community development services. A relatively high number of community development non-profit organizations are located within MCB's MSA assessment area. As such, qualified investment and community development service opportunities may be found by local financial institutions within the assessment area. 17

19 New York, NY FAR LENDNG OR OTHER LLEGAL CREDT PRACTCES REVEW MCB is in compliance with the substantive provisions of the anti-discrimination laws and regulations. No evidence of discriminatory or other illegal credit practices was identified as being inconsistent with helping to meet credit needs of the assessment area. 18

20 CRA APPE1'"1lX A GLOSSARY Aggregate lending: The number of loans originated and purchased by all reporting lenders in specified income categories as a percentage of the aggregate number of loans originated and purchased by all reporting lenders in the metropolitan area/assessment area. Census tract: A small, relatively permanent statistical subdivision of a county or statistically equivalent entity delineated for data presentation purposes by a local group of census data users or the geographic staff of a regional census center in accordance with the Census Bureau guidelines. Designed to be relatively homogeneous units with respect to population characteristics, economic status, and living conditions at the time they are established, census tracts generally contain between 1,000 and 8,000 people, with an optimum size of 4,000 people. Census tract boundaries are delineated with the intention of being stable over many decades, so the generally follow relatively permanent visible features. However, they may follow governmental unit boundaries and other invisible features in some instances; the boundary of a state or county) or statistically equivalent entity} is always a census tract boundary. Community development: Affordable housing (including multifamily rental housing) for lowor moderate-income individuals; community services targeted to low- or moderate-income individuals; activities that promote economic development by financing businesses or fanns that meet the size eligibility standards of the Small Business Administration's Development Company or Small Business nvestment Company programs (13 CFR ) or have gross annual revenues of $1 million or less; activities that revitalize or stabilize low- or moderateincome geographies; or loans, investments or services that (i} Support, enable or facilitate projects or activities that meet the "eligible uses" criteria described in Section 2301c of the Housing and Economic Recovery Act of 2008 (HERA), Public Law , 122 Stat. 2654, as amended, and are conducted in designated t.arget areas identified in plans approved by the United States Department of Housing and Urban Development in accordance with the Neighborhood Stabilization Program (NSP); (ii} Are provided no later than two years after the last date funds appropriated for the NSP are required to be spent by grantees; (iii) Benefit low-, moderate- and middle-income individuals and geographies in the bank's assessment area(s} or geographies outside the bank's assessment area(s) provided the bank has adequately addressed the community development needs of its assessment area(s). Effective September 1, 2005, the Board of Governors of the Federal Reserve System, Office of the Comptroller of the Currency, and the-federal Deposit nsurance Corporation have adopted the following additional language as part of the revitalize or stabilize definition of community development. Activities that revitalize or stabilize- (i) Low-or moderate-income geographies; (ii) (iii) Designated disaster areas; or Distressed or underserved nonmetropolitan middle-income geographies designated by the Board, Federal Deposit nsurance Corporation, and Office of the Comptroller of the Currency, based ona. Rates of poverty, unemployment, and population loss; or 19

21 b. Population size, density, and dispersion. Activities that revitalize and stabilize geographies designated based on population size, density, and dispersion if they help to meet essential community needs, including needs of low- and moderate-income individuals. Family: A family is a group of two or more people related by birth, marriage, or adoption and residing together; all such people (including related subfamily members) are considered as members of one family. Full review: Performance is analyzed considering performance context, quantitative factors and qualitative factors. Geography: A census tract delineated by the United States Bureau of the Census in the most recent decennial census. Home Mortgage Disclosure Act (HMDA): The statute that requires certain mortgage lenders that do business or have banking offices in a metropolitan statistical area to file annual summary reports of their mortgage lending activity. The reports include such data as the race, gender, and income of applicants, the amount of loan requested, and the disposition of the application ( e.g., approved, denied, or withdrawn). Home mortgage loans: ncludes home purchase and home improvement loans as defined in the HMDA regulation. This definition also includes multifamily (five or more families) dwelling loans, loans for the purchase of manufactured homes, and refinancing's of home improvement and home purchase loans. Household: A household consists of all the people who occupy a housing unit. A household includes the related family members and all the unrelated people, if any, such as lodgers, foster children, wards, or employees who share the housing unit. A person living along in a housing unit, or a group of unrelated people sharing a housing unit such as partners or roomers, is also counted as a household. The count of households excludes group quarters. Low-income: ndividual income that is less than 50% of the area median income, or a median family income that is less than 50%, in the case of a geography. Market Share: The number ofloans originated and purchased by the institution as a percentage of the aggregate number of loans originated and purchased by all reporting lenders in the MA assessment area. Metropolitan Statistical Area (MSA): A geographic entity defined by the federal Office of Management and Budget for use by federal statistical agencies, based on the concept of a core area with a large population nucleus, plus adjacent communities having a high degree of economic and social integration with that core. Metropolitan Division: A county or group of counties within a Metropolitan Statistical Area that contains a population of at least 2.5 million and represents an employment center(s) associated through commuting ties. 20

22 Middle-income: ndividual income that is at least 80% and less than 120% of the area median income, or a median family income that is at least 80% and less than 120%, in the case of geography. Moderate-income: ndividual income that is at least 50% and less than 80% of the area median income, or a median family income that is at least 50% and less.than 80%, in the case of geography. Multifamily: Refers to a residential structure that contains five or more units. Owner-occupied units: ncludes units occupied by the owner or co-owner, even if the unit has not been fully paid for or is mortgaged. Qualified investment: A qualified investment is defined as any lawful investment, deposit, membership share or grant that has as its primary purpose community development. Rated area: A rated area is a state or multistate metropolitan area. For an institution with domestic branches in only one state, the institution's CRA rating would be the state rating. f an institution maintains domestic branches in more than one state, the institution will receive a rating for each state in which those branches are located. f an institution maintain.s domestic branches in two or more states within a multistate metropolitan area, the institution will receive a rating for the multistate metropolitan area. Small loan(s) to business(es): A loan included in oans to small businessesh as defined in the Consolidated Report of Condition and ncome (Call Report) and the Thrift Financial Reporting (TFR) instructions. These loans have original amounts of $1 million or less and typically are either secured by nonfann or nomesidential real estate or are classified as commercial and industrial loans. However, thrift institutions may also exercise the option to report loans secured by nonfarm residential real estate as "small business loans" if the loans are reported on the TFR as nonmortgage, commercial loans. Upper-income: ndividual income that is more than 120% of the area median income, or a median family income that is more than 120%, in the case of geography. 21

23 CRA APPE1'"DX B 2014 Aggregate Comparison Loan Distribution Table Assessment Area/Group: MSA HMDA ncome Categories By Tract ncome By Borrower ncome Bank Ag regate Bank Ag,regate # % % S(OOOsl % :f 1 % $(0001\ # i % % S(OOOsl % % $(000sl Home Purchase Low 0 3.8% 3.5% 0 2.0% ' 1.0% Moderate % 13.7% 0 9.4% 4.4% Middle % 29.4% % 12.0% Upper % 53.2% 4 sc.0% 89.3% 53.9% 65.4% Unknown 0 0.1% 0.2% % 15.2% 17.2% Total : Refinance 0 Low 4.0% 3.7% 4.1% 2.1% Moderate % 13.2% 11 ~ 1! 5.3% Middle % 31.5% % 12.5% i Upper % 51.4% % 62.5% Unknown 0 0.1% 0.2%! % 17.7% Total Home m rovement ; Low 0 4.1% 2.1% 0 ' 3.7% 0.9% i Moderate % 10.4% % 3.6% Middle % 20.8% % l 7.4% Upper % 66.5% % 53.5% 'Unknown 0 0.1% 0.1% % 34.7% ' Total Multi-Family Low % 16.2% o! Moderate % 27.8% 34.8% 29.3% 0 Middle 11.1% 6.5% 19.2% 16.5% 0 Upper % 65.7% 28.3% 37.9% Q Unknown 0 0.4% 0.2% Total HMDA Totals Low 0 4.3% 6.5% 2.6% 1.0% Moderate % 20.1% 17.0% 17.3% H 9.4% 3.5% Middle 1 6.7% 4.7% 39.0% 26.5% 18.5% 9.1% Upper % 75.1% 39.5% 49.4% 26.7% 23.4% 50.9% 48.8% Unknown 0 0.1% 0.2% 73.3% 76.6% 18.6% 37.6% Total U SMALL BUSNESS By Tract ncome Bank Aggregate # % % S{OOOs) % % S(000sl Low % 1.5% 9.1% 8.0% Moderate % 59.0% 19.0% l 17.3% Middle % 23.1% 27.7% ' 25.9% Upper % 16.4% 40.8% 43.8% Unknown 0 2.6% 4.3% Tract Unknown 0 0.8% 0.7% Total ! 10 By Revenue $1 Million or Less % 91.1% 41.2% 30.3% By Loan Size $100,000 or less % 2.3% 95.7% 42.0% $100,001-$250, % 9.6% 1.9% 11.6% $250,001-$1 Million % 2.4% 46.4%, Total Ongmattons and Puichases 22

24 Jacome Categories 2015 Aggregate Comparison Loan Distribution Table Assessment Area/Group: MSA By Tract ncome mma B, Borrower ncome Bank ~regate Bank ~re1ate # % % S(OOOs) % % S{OOOs) # % % s,ooosl % % srooosl Home Purchase Low 0 3.9% 3.6% 0 2.3% 1.2% ModeJate % 13.9% 0 9.9% 4.6% Middle % 9.9% 40.00/o 29.8% 0 20.S% 12.6% Upper "/o 90.1% 39.8% S2.6% 0 S3.8"/o 65.4% Unkn "n /o O.OOA, 0.00/o 0.1% o/o % 16.1% Total Reft.aaace Lem /o 4.00/o 3.8% 0 2.8% 1.S% Moderate /o 16.1% 14.3% 0 8.4% 4.4% Middle % 32.0% /o 18.0% 12.1% Upper /o 39..3% 49.9% % 61.2% Unkncrnn 0 0.0"/c, 0.1% /o 20.S% 20.8% Total Home m,rm~meat Low 0 4.7% 3.2% 0 3.9% 0.7% Moderate /o 0.0"/o 16.00A, 16.8% 0, 12.4% 3.6% Middle % 21.6% % 8.5% Upper % 58.1% 0 S4.S% S8.2o/o Unkn "n 0 0.1% 0.3% /c, 0.00/o 8.5% 29.00/o Total 0 0.()% /o M ultl-f amllr Low 1 S 31.3% 1S.S% 13.9% 0 Moderate /o 33.6% 27.7% 0 Middle /o 20.3% 17.2% /o Upper % 30.6% 41.2% 0 0.0"/o Unknown 0 0.1% To,al ]0 10 HMDATotak Low % 4.3% S.7% /o 2.4% l.o"a, Moderate 0 16.S-/o 16.9% 0 0.0"/o 9.1% 3.6% Middle 1 2 S.2% 39.CS /o 27.6% % 9.8% Upper /o 39.3% 49.7"/o % 50.8% Unknown 0 0.0"/o O.OOA 0.00/o 0.1% s % 34.8% Total j j SMALL BUS1\'ESS By Tract ncome Bank Auresate # % %S(000s) % % SCOOOsl Low 0 9.6% 7.9% Moderate 1 5 S2.6% 20.3% 16.5% Middle l % 28.1% 25.6% Upper 0 0.0"/o 38.9% 44.9% UmtD0\\ /o 0.0"/o 2.5% 4.6% TndUnknown 0 0.6% 0.S% Total /o $1 Million or LeS1 J 5 Byluvenu.e 47.4% 48.8% 28.9% By Luau. Size Sl00,000 or less /o 0.00/.i 96.2% 46.5% $100,00l S2SO,OOO 0 1.9% 12.4% Slso.001.st Millim % 41.2% Total Originations m.d Pu.rcbB5es 23

25 CRA APPENDX C ASSESSMENT AREA MAP Metropolitan Commercial Bank 2016 Assessment Area NC'DM[ r:... - c~.,..... c.. dd.. L_, c!jffl<wj"~.. c...,.... ~ 8ANKRANCHl.5 ~!::~Cr.llt.1,,.,. S a.-.11ue.:-.,u.tllw ~--4Nt:,,